Now, developing economies are leading the markets back with gains of almost 50 percent, making Russia a better investing bet than California.

Indeed, as the U.S. and U.K. borrow record amounts to fund bank bailouts and stimulus, Brazil, Russia, India and China have $3 trillion in reserves — up 19 percent from January 2008 and now 43 percent of the worldwide total.

The annual cost of protecting holdings in Turkey’s bonds fell by half to $200,000 per $10 million for five years, or 200 basis points, sinking below New York City swaps for two weeks starting July 22.